Feature / Birth of a pathway

Pathway tariffs are seen by some as the way to provide incentives for providers to optimise patient services across the whole pathway. Steve Brown examines early work to produce the first such tariff covering maternity care.

There is no shortage of reading matter for those with a role in payment by results at this time of year. The guidance for 2011/12 runs to 108 pages – before appendices. And that doesn’t include additional papers on the detailed workings of the market forces factor, specialist top-ups or the code of conduct. But buried within the guidance is half a sentence that signals a milestone in the development of PBR. ‘In 2012/13, we anticipate introducing pathway tariffs for maternity which support women’s choices.’

Pathway tariffs are seen by many as offering an opportunity to support the development of patient pathways that deliver the right care to patients in the right setting but also deliver that care as cost effectively as possible.

Maternity services are seen as a prime candidate. Payment mechanisms – with aspects such as community midwife services covered by local block contracts and other components paid for at national tariff rates on a per intervention basis – do not always provide the right incentives for optimising pathways.

The announcement in the PBR guidance should not come as a surprise. Last summer’s white paper on health service reform promised to accelerate the development of pathway tariffs, and maternity has long been seen as a contender by those in the service as well as at the Department of Health.

Why maternity? Well, it consumes a reasonably sized amount of resources. The NHS spent £2.56bn on maternity services, according to the 2009/10 reference costs (roughly half on deliveries and half on antenatal and postnatal care). While this was up just £60m on the previous year, it has risen by about £1bn in the past decade, partly as a result of increased investment in health in general, partly as a result of being identified as a priority area. It is also relatively predictable, which lends itself well to the pathway model.

But there is broad agreement that aspects of the current tariff do not work – particularly around non-delivery events.

There are also wide-ranging views about costs and income for maternity services. Some commissioners see maternity as a licence for providers to print money – a worried well mother visiting a maternity clinic for reassurance potentially triggers a payment of several hundred pounds.

Meanwhile, providers point to the Foundation Trust Network’s benchmarking exercise, which demonstrated that costs, at least for deliveries, were not matched by tariff income. (It also highlighted wide-ranging income per community midwife in local block contracts). And some trusts say strategic health authority reviews have assessed maternity services in general as loss-making.

Overall funding

The pathway tariff will not change overall funding levels. The quantum of resources as identified in reference costs will stay exactly the same. But it could help to make funding more transparent and provide the right financial incentives to optimise pathways. For instance, with a pathway tariff the focus will be on making the right intervention for patients (a community contact, say, rather than a hospital visit) and the relative value for money of different interventions and not the income (or lack of it) that would be earned from a specific activity.

The biggest concerns about the existing payment mechanisms lie away from the delivery room. Under the former version of healthcare resource groups (version 3.5), N12s – antenatal admissions not related to delivery – were the single largest HRG by volume.

It caught a whole range of non-delivery obstetric activity – from scans to reassuring a worried mother-to-be – all attracting the same tariff price. With growing levels of activity and concerns over coding and recording, rules had to be issued to clarify when the N12 category was appropriate and when an outpatient attendance should be recorded instead.

A more granular HRG4 was supposed to provide a fix for this, recognising the different cost implications of interventions of different intensity. As of 2011/12 there are seven N12 replacement HRGs – and with age splits, there are 20 groupings spread across NZ04 to NZ10.

But coding and recording issues have continued and the Department has continued to make manual adjustments to the non-delivery tariffs, transferring costs to deliveries. Without this, many commissioners may run into affordability problems.

Even with the adjustments there is recognition that the system doesn’t work. As previously explained (Healthcare Finance April 2010, page 12), different practices on booking in patients – often a quirk of history, custom or local preference – could mean a threefold difference in the price paid, despite identical interventions.

The Department has acknowledged that rather than further temporary fixes, it should move rapidly to a pathway tariff. However, its speed of movement does not mean bypassing the service’s involvement and testing – a feature that has accompanied most aspects of PBR development.

Maternity commissioners and providers from around the country including Manchester, Liverpool, Bristol, Newcastle and London, have helped inform the Department’s approach. Providers in the North West are currently taking part en masse in a detailed data collection exercise to understand the relationship between different activities, particularly within local block contracts.

While we may still see a single pathway tariff covering the whole maternity pathway, from the booking-in assessment to the handover to health visitors, the Department has initially split it into three modules: antenatal care, the birth spell (to discharge) and postnatal care.

Reference costs provides significant amounts of detail about the birth event itself. Although the current tariff only puts different prices to three types of delivery – normal, assisted and caesarean, with further splits for age and complexities/comorbidities – reference costs, and what would have been or could still be the tariff for 2012/13, provide a more granular breakdown. They recognise the different costs associated with epidural, induction and post-partum surgical interventions, and the resource implications of planned versus emergency sections.

A pathway tariff for this module could retain the current granularity or be as simple as a single price or two different prices covering with or without complications/comorbidities.

With current tariff prices ranging from about £1,200 for ‘normal’ delivery to more than £3,000 for a caesarean, a single tariff – say of £1,700 – would clearly have to take account of the national rates for normal deliveries (about 64%) and sections (21%).

But a mechanism would also be needed to ensure tertiary centres were protected from having to undertake complex deliveries at average prices.

Improving understanding

The current focus is on the ante and postnatal modules, where there is less understanding of how the roughly £1.3bn of resources are distributed. A three-way split is being explored, dividing women at the booking assessment stage into either core, enhanced or specialist.

Jean-Armand Clark, from the Department’s PBR development team, clarifies that ‘core’ equates to ‘average’ – not a standard or normal pathway. So this would also include mothers-to-be who had previously had caesarians, current smokers and those with obesity (body mass index 30 to 34). The tariff would be set to cover costs across a typical casemix.

‘The idea is to achieve a tariff that is both practical and, crucially, simple,’ says Mr Clark. The use of existing categorisation assigned by midwives at the booking in stage has been investigated. However the Department is currently using a trial template (see above) to test how categorisation could work.

Details need to be clarified – could a woman change pathway if she developed hypertension or diabetes during her pregnancy? ‘Approaches could range from changing to a different pathway, with a pro rata payment to cover the remainder of the antenatal care, to not allowing changes but building in an allowance for switches into the prices set,’ says Mr Clark.

On its own, making this upfront categorisation so important in terms of getting the right tariff payment could lead to pathway changes. Mr Clark points to midwife suggestions that initial scans could be performed at the same time as the booking-in assessment. This would reveal enhanced or specialist criteria such as triplet pregnancy, and enable the right tariff to be assigned from the outset – and save the woman a separate visit.

Getting the quantums right, both for antenatal and postnatal care, will be crucial to the tariff setting and the current data collection will help understand the relativities.

The new maternity minimum data set, due to be active from April 2012, will play a key role – particularly in ensuring issues such as complex social factors are considered at the postnatal stage and initial assessment.

Mr Clark stresses the aim of simplicity and says the tariff won’t deliver everything. Commissioners will need to monitor providers’ casemix and practice, including tertiary referrals, and the standard contract will provide the main mechanism for delivering quality and patient experience improvements.

There is a lot of distance still to travel and nuances to be addressed – will rural subsidies be necessary for example? The formal timetable talks of introduction in 2012/13. Finance managers at a recent meeting of the HFMA’s PBR Special Interest Group believed introducing the tariff in shadow form before making it mandatory would be a sensible step, helping organisations to fully understand the implications. Whatever the approach, the first pathway tariff looks well on the way to completion.